Important to establish transparency and good governance in the banking sector

The Center for Policy Dialogue (CPD) organised a seminar on the country's banking sector on Thursday. Economists and experts participating in this seminar entitled 'What lies ahead for the banking sector of Bangladesh' brought up the much-discussed problems of this sector. For example, the actual amount of defaulted loans in the country is 5.5 lakh crore; Apart from the state banks, the defaulted loans are also increasing in the private banks, but no action is being taken against the bank robbers. The country does not have the necessary legal framework for recovery of defaulted loans. Due to lack of sufficient judges, the cases of defaulters are not being settled easily. Depositors are suffering by keeping money in the bank.

There is no good governance, accountability and transparency in the banking sector. The central bank's indecisiveness, frequent decision changes are also discussed. Banks are one of the driving forces of the country's economy. Everyone knows that there are many problems in this sector for a long time. There is corruption-irregularity-chaos, and a big problem in this sector is high defaulted loans. Excessive non-performing loans have become one of the main causes of capital shortfalls in banks. It can be said that defaulted loans are weakening the foundations of banks.

Defaulted loans are creating risk not only in the banking sector but also in the overall economy of the country. Excessive defaults are affecting credit management. As a result, good entrepreneurs cannot move forward. As a result, investment and employment are not increasing. So, controlling defaulted loans has become essential. Experts believe that the banking sector needs to be overhauled as a permanent measure to resolve the crisis.

In this context, CPD has recommended that all banks appoint directors only on the basis of merit. Besides, the organization recommended disbursement of loans within the limits as per the rules. It is also advised not to give control of more than one bank to one person or group. The organization also demanded the formation of a banking commission to reform the banking sector.

In fact, the demand for the formation of a commission for the reform of this sector has been long. There is also a demand to bring necessary amendments in the Bank Companies Act. The activities of the banks, especially the state-owned banks, should be closely monitored. The autonomy of the central bank should be ensured. The banking sector has faced various problems during the previous tenure of the government. We remember that the then finance minister had announced strict action against defaulted loans soon after assuming office. We applauded him for his strong stance on recovery of defaulted loans. But unfortunately, we have not seen the implementation of this statement. Therefore, we hope that the current finance minister will take effective steps to resolve all the irregularities in the banking sector including defaulted loans.